Saving money is one of the most popular resolutions for adults, yet, YouGov research shows that less than a third (31%) of adults manage to do it. Our research shows us that kids fare better, so if you want to encourage healthy financial habits, here are the best money-saving challenges to try.
7 money saving challenges to try
When it comes to financial education and teaching kids about money, one of the most important areas to cover is how to save. Beth Zemble, VP for Education at GoHenry, says: “Try to instil a savings habit, like always putting aside a portion of pocket money per week or adding monetary gifts into savings from an early age. If kids learn to put money into savings as a matter of course, that habit is more likely to continue as they transition into adulthood and begin to budget to pay for their needs and wants.”
To help them reach this point the following money saving challenges can help to encourage them to save and reap the rewards of saving.
The £1 challenge - save £365
This is an effortless money-saving challenge and involves saving £1 each day (it can be less with younger children say 10p or even 1p - see below). So, in an average year, your child can save £365. But you can also add an extra twist to this challenge and suggest the amount your child saves each week increases by £1 each week. So they start by saving £1 in week one, £2 in week two, £3 in week three and so on. By the end of the year, they will have saved £1,378.
The 1p challenge
A brilliant challenge for any child daunted by the idea of saving money. This challenge starts with saving just 1p on the first day, rising to two pennies on the second day, three on the third, and so on. On the last day of the year, the 365th day, they will save £3.65. Once you combine all the savings, they'll have saved £667.95. Again if you child is younger or has less pocket money you can simply go for a lesser amount.
A great challenge for the whole family. It involves not spending any money, for a set day every week, such as a Sunday. You can still pay for necessities but you can't spend any money on anything extra, not even a packet of gum. If a person manages it for a month, they get an agreed upon amount to add to their savings.
The spare change challenge
A brilliant challenge that gets rid of all that loose change floating about the house. Use a large container or glass jar, and encourage everyone to fill it with small change, like pennies, 5-pence pieces and more. Promise them that once the pot is full, you'll take it to the bank and have a day out on the money saved.
The round-up challenge
This challenge involves encouraging your kids to round up their purchases to the nearest pound and save the difference. For example, if your teen buys a bubble tea for £2.60, they would save 40p. If your child buys a toy for £1.35, they will save 65p. By the end of three months, show them how much money they have saved.
The £100 challenge
This challenge involves saving £100 as fast as you can. Brainstorm ways to do this with your kids and make it into a competition to see how you can cut back on expenses and find ways to make extra money. This is a great challenge for kids who want to save up for a high-ticket item.
Weather savings challenge
This is an enjoyable challenge that might appeal to younger kids. Every day for six months, your child deposits into savings an amount that matches the day's highest temperature.
So in a week in April this might be, 13 + 10 +14 +9 + 16 + 16 + 12 = 90p (£3.60)
In July this may be 26 + 28 + 30 + 29 +28 + 27 + 31 = £1.99 (£7.96)
At the end of six months, you could have £30 to £50 (summer is a better savings bet than winter, and of course, you count the days when you go abroad too).
What are the benefits of a money-saving challenge for kids
It builds a habit to last a lifetime: Learning to save isn't easy, which is where a savings challenge comes in. Challenges work because saving is a habit; like all habits, it needs to be repeated to sink in.
It makes kids consciously think about their money: Unlike spending, a saving challenge makes a child consciously think about their money and what they are doing with it.
It shows kids how fast money can grow: Seeing their savings grow can be addictive for some kids and helps them to realise their financial goals are within reach.
It helps kids to understand how to set savings goals: More importantly, a savings challenge shows kids the importance of setting savings goals and envision something concrete. With no goal, there's no motivation to save.
- It teaches kids to delay gratification: One of the key lessons to learn about money and saving is to understand how to delay gratification, and a savings challenge can be a great tool as they are working towards an achievable goal and that helps to avoid impulse spending.
5 tips on how to keep your kids engaged with money-saving challenges
1. Add in a fun twist - such as extra challenges along the way or a lucky dip to take a small amount out of savings to spend.
2. Top up their money with 'interest' to encourage them to keep going.
3. Make it a competition. Kids love to compete with you and their siblings but be sure to make the playing field even. If they are saving 1p a day make sure you save £1 a day.
4. Suggest 'rewards' for savings. Such as, if they save £5, they can choose their bedtime for the night. For £10, they can select dinner, £20 - a day out.
5. Above all, always realistic goals. Kids are more likely to give up if the goals are too difficult. Make sure challenges and savings goals are achievable.
What happens if your child fails part way through the challenge?
Be patient with your kids if they don't fulfil the challenge. As adults, we know how hard it can be to save money. Plus, developing good financial habits and learning the benefits of saving takes time. If your kid slips up, don't make a big thing about it. Help them get back into the challenge by talking about their spending decisions. What choices did they make? And what would help them to stick to the challenge.
What should your child do with the money they save from the money-saving challenge?
Once your child has saved a lump sum, encourage them to put it into a child savings account so the money can grow with interest and compound interest.
Good options here are:
A Junior ISA. There are two types of Junior ISAs, a cash Junior ISA and a stocks and shares Junior ISA. This needs to be opened by a parent or Guardian, but money can be paid into it by anyone, up to £9000 a year. With a stocks and shares Junior ISA funds can go up and down.
Regular savings accounts are designed to encourage regular saving, so your child has to save money every month. They usually pay a higher interest rate than instant savings and easy-access accounts.
A fixed-rate bond savings account is a good option if you have a lump sum to deposit that you won't need to access for several years. With fixed-rate bonds, your money is locked away, typically for up to five years, and the interest rate will stay the same from the day you open the account until the end of your agreed fixed term.
Premium Bonds are an investment product National Savings and Investment (NS&I) issued. Here accounts are entered into a monthly prize draw where you can win between £25 and £1 million tax-free.
GoHenry account. This is an alternative to a children's savings account and is a prepaid kids debit card. With this, kids get all the benefits of a debit card and savings pot while learning how to manage their own money.
How can GoHenry help?
GoHenry offers several features that can help kids save money. For example, kids can set up savings goals on the app with direct autosave so that once pocket money is paid; a percentage goes automatically into savings.
"The savings goal function is one of our app's most popular features," says Louise Hill, Co-founder and COO of GoHenry. "Parents and kids can set personalised goals to earn towards. It could be anything from saving for the latest video game to a special birthday gift." Alongside this GoHenry comes with Money Missions on the app, a specialised learning area to teach your child more about saving and investing.